“This is one of the best things Berkshire could do,” said Steven Check, president of Check Capital Management Inc in Costa Mesa, California, which invests one-sixth of its $1.5 billion of assets in Berkshire. “This is a template for a model that has been very good for the company.”

Berkshire did not immediately respond to a request for comment.

Occidental offered last week to buy Anadarko for $38 billion, topping the $33 billion that Chevron Corp had agreed to pay.

The companies are battling for Anadarko’s prized assets in West Texas’ Permian shale oil field. Anadarko said on Monday it had agreed to start negotiations with Occidental.

Buffett entered the battle two months after he said in his annual shareholder letter that acquisitions of whole companies did not look imminent because prices were “sky-high for businesses possessing decent long-term prospects.”

He will likely be questioned about Occidental and Berkshire’s cash at his company’s annual meeting on Saturday in Omaha, Nebraska, which typically draws more than 40,000 people.

“This transaction falls short of an outright acquisition by BRK, something the market is craving,” CFRA Research analyst Cathy Seifert wrote. She rates Berkshire a “hold.”

LENDER OF LAST RESORT

Buffett has been seen since the global financial crisis as a lender of last resort to blue-chip companies desiring a financial boost and his imprimatur.

From 2008 to 2011, Berkshire invested more than $25 billion in high-yielding stocks and bonds of such companies as Bank of America, Dow Chemical, General Electric, Goldman Sachs and Harley-Davidson.

Occidental follows that template.

Berkshire would buy $10 billion of preferred stock throwing off $800 million of dividends annually for at least 10 years.

The 8 percent payout is roughly double the yields on Occidental’s longer-term debt.

Buffett would also get warrants to buy up to 80 million Occidental shares at $62.50 each, 4 percent above their Monday closing price.

Analysts said Berkshire’s financing looked expensive for Occidental but could help it buy Anadarko without taking on too much leverage.